IRC officials try to play down hardline image

But as the Industrial Revitalization Corp. moves closer to its grand opening next month, officials of the government-backed corporation tasked with turning around troubled businesses are trying hard to play down its hardline image, saying it will not preside over ailing firms as “the Lord of Hell.”

The nickname, dreamed up by Finance Minister Masajuro Shiokawa, does not reflect the real mission of the IRC, according to Atsushi Saito, a 63-year-old former executive of Nomura Securities Co. and the prospective president of the IRC.

“We have no legal authority to crush overcrowded sectors or ax bank presidents,” he said in a recent interview. “We are no Lord of Hell; we are in fact a very kindhearted Buddha.”

He is gearing up his sales pitch as the IRC takes aim at what the nation has failed to accomplish over a decade — nurse ailing companies back to health, halve some 50 trillion yen in banks’ sour loans and help Japan Inc. find a way out of recession.

If things go well, the IRC will have lots of companies, or “clients” as it calls them, to save. The IRC, with 50 billion yen in capital and an army of turnaround professionals, hopes to buy up debts of failing companies it finds salvageable, resuscitate them and then sell the loan assets at a profit in three years. The agency is to be disbanded in five years.

Yet it is doubtful whether the body will be able to maintain the Buddha profile. The IRC will need to make some tough decisions to rescue companies in massively overcrowded industries, such as retail and construction.

Successful restructuring of these sectors will inevitably require job cuts — a touchy issue amid record high unemployment.

Amid bitter complaints from some politicians that a drastic turnaround of certain industries would exacerbate the unemployment situation, the IRC bill has been revised so the body must “take employment stability into consideration.”

But Shinjiro Takagi, pegged to be chairman of the Industrial Revitalization Committee, a seven-member panel that will decide which companies to rescue, said in a separate interview that because the IRC is using taxpayer money, downsizing is inevitable in over-saturated businesses.

“If a company fails entirely, that means a significant loss of jobs. By cutting some jobs in a company, you can save the rest,” he said. “For macroeconomic policies for the jobless, please go to the Health, Labor and Welfare Ministry.”

Saito, a gifted businessman, played down the inevitable job cuts, saying the IRC should not be feared and will not tear companies — or their banks — to pieces. Rather, Saito says with a laugh, he’ll be the one to get fired if nobody comes to the IRC.

There is no knowing how much of a reform the kindhearted Buddha will bring to the nation’s sick economy. But Saito, who spent 10 years of his 40-year business career at Nomura’s U.S. subsidiary, said a U.S.-style turnaround will not suit Japan. He claims the American way creates only one winner out of 100.

“I’m not saying Japan’s industries should stay as inefficient as they are,” he said. “But many Japanese people would feel uncomfortable to live in an extremely efficient economy. The business turnaround people like to see here is one where everyone will be sort of happy.”